How to avoid cashflow

Here are two startling statistics of start-up businesses:

·         One in four businesses don’t make it through the first year

·         More than half don’t survive past the fifth year of trading

There can many reasons for this, but one of the main reasons for this is down to cashflow – without it, a business simply cannot stay afloat. Below are some of the most common cashflow problems and some advice on preventing them from occurring in the first place.

Keeping accurate company records

Lots of new business owners put off bookkeeping duties as they are so busy with the huge workload that can be involved with setting up a new company.

The longer the books are neglected, the worse the problems will get; records and forecasts are pivotal to you knowing what is happening in your business.

It’s also important to ensure that you keep a proper record of what customers have and haven’t paid you to avoid significant sums of money that may owed to you getting overlooked. An effective accounting system is vital to manage your cashflow.

If you don’t have the time to do this yourself, an accountancy practice or bookkeeper will be able to do this for you.

How to manage company debts

Slow payers or bad debt is money that is owed but not paid.

This can be crippling for any new company but is usually preventable if a proper credit control system is put into place early on. If you discover that a customer has a poor credit record but you still want to take them on as a client, ask them for an upfront deposit or issue partial invoices so they can pay as portions of the work are completed. In other words, understand your customers and manage the risk.

A customer at any cost?

Calculate very carefully if want to offer credit terms - does your business model support it? If it doesn’t work early on don’t do it; you can always introduce credit terms as and when the business can afford it.

If you are currently in this situation then re-negotiate terms with your customers and/or suppliers or consider factoring the debt.

No cashflow forecast

A cashflow forecast is vital for any new business and is something that a qualified accountant can put together for you. This will allow you to forecast the months you can expect to see a cash deficit and the months when you may experience a surplus.

It will allow you to plan ahead as well, as give you a pretty good idea of how much cash your business is going to need over the next 12 months in order to survive. It is a good idea to keep the forecast on a rolling 12 month basis.

Free of charge accounting advice from Chartered Accountants

Omni Chartered Accountants offer totally free of charge advice for any business – new or otherwise – that may be experiencing difficulties. We are also here if you or would like to find out more about our cost-effective solutions that are designed to help your company run smoothly.

Call us now on 01902 837 408 or request a free of charge call back from our website today!

Top 5 tips for productive business meetings

Business meetings are a great way to put a face to a voice or name, and to build relationships with suppliers and clients.

But are your business meetings productive? Poor planning or meetings for meetings’ sake could all be a waste of your valuable time and end up being counter-productive in the worst-case scenario.

Here are our top 5 tips for productive business meetings:

1. Be prepared for your meeting

Always have an agenda outlined and have copies for any attendees to hand – it also helps to email them over to anyone who is coming to the meeting beforehand in case they would like to add something, or if there is something you have missed or would like to research prior to the meeting date.

2. Be certain about your objectives

Do you want to solve problems, build a relationship, sign off a deal or project, sell a company service or network?

3. Time costs money

Once you have identified your meeting objective clearly, you can set about allocating a time slot. Time is money, so have a think about how long your meeting should last and try and stick to it if you can – we all know that meetings can often over-run unnecessarily!

4. Get involved

Be aware of your involvement and contribute and lead wherever possible – at the same time, try and give attendees the chance to participate!

5. Be a host

Of course, it goes without saying that tea, coffee or soft drinks should be offered but remember that small snacks are also usually very welcome; even small acts of kindness like offering biscuits usually help forge relationships.

We speak to many small business owners who don’t value their time nearly enough – an afternoon or day away from the office can be costly and often also involve plenty of stressful catching up!

If the meeting is unproductive, this can only lead to frustration.

Follow us on Twitter @OmnitasTax to keep up to date with our latest blogs specially written with the UK SME in mind – and remember, we are always here to help advice and guide with business matters as well as offering cost-effective, professional accountancy solutions!

You can request a free of charge call-back from our website or call 01902 837 408 today!

OTS summer budget news for the UK SME

The government announced in its Summer Budget that the Office of Tax Simplification is due to review the closer alliance of National Insurance and income tax.

On the government agenda this autumn will be consultation on reforming Class 4 NICs, abolishing Class 2 NICs and simplifying NICs for the self-employed.

Taxation of SMEs will also be reviewed, with a focus on deformations between personal and business tax systems and the complexities that are faced by many small businesses in the UK.

The OTS has been in place since 2010 and will now remain on as a permanent office of HM Treasury.

It is there to advise the government on how to develop and deliver a simpler tax system, including compliance issues and provide independent advice on tax complexity issues.

Financial secretary to the Treasury, David Gauke, outlined the plan in a letter to the leaders of the OTS:

“The first is a closer review of alignment of income tax and national Insurance contributions. This is an area often cited as an area of complexity for taxpayers.

“I would like the OTS to look at what the impacts, costs and benefits of closer alignment would be and to set out what the necessary steps would be to achieve closer alignment. This is a new type of review for the OTS, focusing on the issues and impacts rather than on making specific recommendations.

“The second is a review of the taxation of small companies, focusing on the distortions between the personal and business tax systems. This builds on your previous review of small business tax which focused on unincorporated small businesses.”

OTS summer budget news for the UK SME

What do you think about the OTS – will they really simply business for the UK SME? Join in the conversation on twitter @OmnitasTax or like us on Facebook!

Do I really need an accountant?

There are good reasons for hiring an accountant at different stages of your company's growth.

Whether it is help with a business plan, forming a company, dealing with a loan application or even a government audit, Omni can make life easier for you, proving to be a worthwhile investment.

Can I afford an accountant and do I need one full time?

You don’t always need to employ an accountant full-time or hire one on a retainer basis – that is entirely within your control.

Like all small business owners who are looking to save money, you may think you can’t afford an accountant. But look at how long it would take you to do certain tasks (such as calculating taxes), and ask yourself - is that a good use of your time?

For example:

• Ø  Let’s say it takes you 20 hours to do your taxes
• Ø  Your time is worth £60 an hour
• Ø  Doing taxes yourself costs £1200

And there’s always the risk you’ve made errors – especially if you’re multi-tasking like most business owners.

However, if you get an accountant like Omni to take care of time-consuming tasks like taxes, it’s quite likely that they will cost you less per hour than your time is worth. You’ll not only have extra time to free you up to generate revenue, but you’ll have peace of mind that an expert is taking care of the details.

So what other moments during the life of a typical small business might you want to hire an accountant to help you?

Advice about your company’s legal structure

Not all businesses have the same legal structure – there are different types that are determined by a number of factors. Some might be called limited companies, limited liability partnerships or corporations, others could be sole traders or proprietors.

Sole trader vs Limited Company

You should carefully consider each type before deciding which one best suits you. Omni can help advise you on this. For example, you may do business as a sole trader or sole proprietor, working on a self-employed basis and invoicing under your own name. If this is the case, you might be able to offset some of your living expenses against tax.

However, this also means you could be held personally liable for any business-related obligations. If your business fails to pay a supplier, defaults on a debt or loses a lawsuit, the creditor could legally come after your house or other possessions.

With a limited liability company structure, it's different. As the name suggests, the liability of the business is limited to the assets owned by the business, not you personally (though there may be exceptions in some circumstances).

Omni can explain the legal business structures available and help you choose the one that best suits you.

Accountants can help with the finances

Small business accounting can quickly become complex if you do it on your own.

If you feel you're losing control of who owes you money and how much, Omni can help you get back on track.

You may also want to measure key business metrics, such as the ratio of salaries and other employee payments to total revenue. We can help by managing your payroll and producing graphs so you can see how the ratio changes over time.

Hiring an accountant when you're ready to delegate

As a small business owner, no doubt one of the things you like best is that you have control. You can set your own working hours, craft your business strategy, regulate your workload (at least to some extent) and determine your own finances. And being the master of all of these things is a wonderful and liberating feeling.

But sometimes it can stop you from delegating. Business owners can feel overworked, partly due to a reluctance to allow other people to help out. You might feel that no one can possibly know your business as well as you do, therefore nobody can handle any part of your business as well as you can.

Inability to delegate can mean you’re left feeling overworked and stressed. At some point you will have to let go, and learn to trust other people to handle some parts of your business so that you can look after the rest. Trust in Omni to help you every step of the way as you grow YOUR business.

Contact us now to find out more or call 01902 837408 for a free initial telephone consultation.